bankruptcyinstruction

Once you file for bankruptcy, an automatic stay is immediately put into place. An automatic stay temporarily stops your creditors from being able to take any action against your income or property. It also freezes any lawsuits pending against you.

There are a few different kinds of lawsuits or actions by creditors that an automatic stay will not stop. It will not stop any criminal proceedings or any attempts to collect alimony or maintenance or support from property that you acquired after filing for bankruptcy or exempt property.

If you file for Chapter 7 bankruptcy, friends or relatives who have co-signed for a loan are not protected by the stay. They can still be contacted by the creditors to collect the full amount due. If you file for Chapter 13 bankruptcy, the stay may protect your co-signers if they cannot benefit from the debt proceeds, the debt was not incurred in the ordinary course of business or the debt is a consumer debt.

Your creditors can file for a Motion for Relief from Stay which would exempt them from the stay and make it so they still have the ability to collect the debt. They may do this if they feel that the property securing your debt is at risk or depreciating quickly or if there is a consensual lien against your home and you are unable to pay the mortgage payments to pay off the debt. You are allowed to file an Objection to their application for Relief from Stay.

Note that due to recent changes in bankruptcy laws, landlords are still able to pursue eviction even if a stay is in place.

Referred from: (http://www.thebankruptcysite.org/)